Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelley. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors.
Speaker 1: And of course Carol that's part of a team of
Speaker 1: twenty seven hundred journalists and analysts more than a hundred
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Speaker 1: also listen to our radio show at two pm Eastern
Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. Let's get into the virus.
Speaker 1: We're so glad to have back with us. Dr Masha Adalga.
Speaker 1: He is infectious disease physician at John's Hopkins Center for
Speaker 1: Health Security at the Bloomberg School of Public Health. On
Speaker 1: the phone from Pittsburgh and of course the Bloomberg School
Speaker 1: of Public Health, supported by Michael R. Bloomberg, founder of
Speaker 1: Bloomberg LP and Bloomberg Radio. I'm Dr Adalge. Nice to
Speaker 1: have you back with us. I gotta ask you something
Speaker 1: I want to jump to something that are Mike make
Speaker 1: Key did an interview with um I believe it was
Speaker 1: the head of the Dallas FED, and they said he said, specifically,
Speaker 1: we need a Manhattan Project, a federal initiative of testing
Speaker 1: and tracing in order to really get control of this virus.
Speaker 1: Is that true? It is definitely true that we have
Speaker 1: to have testing and tracing basically as close to perfect
Speaker 1: as we can, because that's what's going to give people
Speaker 1: confidence to go about their lives knowing that that they're
Speaker 1: going to be cases out there, but those cases are
Speaker 1: going to be handled appropriately. They're going to be found,
Speaker 1: they're going to their contacts are going to be traced,
Speaker 1: and we're not going to allow chains of transmission to
Speaker 1: go undetected and then still into our hospitals and create
Speaker 1: havoc like they did in New York earlier. So this
Speaker 1: is something that needs to be done in every state
Speaker 1: as we move forward in the air of the pandemic
Speaker 1: and so Dr Dolls, what do we know about reopening
Speaker 1: so far? What have we learned as we look across
Speaker 1: the country, what's working? What should we be worried about
Speaker 1: or is it too soon to tell? We know that
Speaker 1: reopening just because that's going to allow people to socially
Speaker 1: interact will cause more cases to occur, and some of
Speaker 1: those cases will end up hospitalized. The key has always
Speaker 1: been about making sure that those cases stay to a
Speaker 1: level that's manageable by hospital. The virus isn't going anywhere,
Speaker 1: and right now we haven't seen anything alarming. There are
Speaker 1: places where cases are going up, and we know that
Speaker 1: that's going to be the case. We haven't heard about
Speaker 1: any hospitals running into a problem where they are unable
Speaker 1: to perform their other operations or or other types or
Speaker 1: having strains on their personal protective equipment or mechanical ventilators.
Speaker 1: So everything looks good so far. This is something we
Speaker 1: have to constantly be vigilant about them and continually look
Speaker 1: at and titrate our response in terms of what social
Speaker 1: distancing can be removed based on what's going on in
Speaker 1: the hospital. So so far, so good, But I think
Speaker 1: this is going to be something we have to eternally
Speaker 1: watched while this virus is around. What do you make
Speaker 1: of so far the pursuit of a vaccine. This is
Speaker 1: really something that is going at a very very fast pace,
Speaker 1: faster than we've ever seen but four. We have multiple
Speaker 1: candidates in phase one and phase two clinical trials using
Speaker 1: innovative technology that wasn't available even a decade ago. But
Speaker 1: it's important to remember that even though we're going as
Speaker 1: fast as we possibly can, vaccine development is something that
Speaker 1: is measured in years, uh not necessarily in months. And
Speaker 1: I don't think it's a good idea to wet ourselves
Speaker 1: to some exact date when we think that we're going
Speaker 1: to have a vaccine, because everything has to go perfect.
Speaker 1: We're just in phase one clinical trials for the most part,
Speaker 1: and we need to get more people studied. We need
Speaker 1: to understand all of the side effect profiles because remember
Speaker 1: we're going to be vaccinating the entire country or the
Speaker 1: even the entire world, and we want to know even
Speaker 1: small side effects. And we have to think about the
Speaker 1: supply chain of things that are simple, like just the
Speaker 1: glass bials that you keep the vaccine, and we have
Speaker 1: to make sure that all of that is put into
Speaker 1: place because this is going to be an industrial scale
Speaker 1: scale vaccine endeavor like we've never seen before. How does
Speaker 1: making it a global effort though that with everybody focused
Speaker 1: on it, helped to reduce the timetable. As you said,
Speaker 1: we've got you know, there's certain things you just got
Speaker 1: to have in place. But I do wonder, with everyone
Speaker 1: so focused on it, is it do something to that timetable.
Speaker 1: As you said, it usually happens in years, not months.
Speaker 1: But because of this concentrated and coordinated effort, at least
Speaker 1: just certainly feels that way. Does that mean we can
Speaker 1: expect it to be done much more quickly? I do
Speaker 1: think we will get a vaccine on a quicker pace
Speaker 1: than than we've seen with prior endeavors to make a
Speaker 1: vaccine on the fly. And I do think that the
Speaker 1: global energy behind us, the fact that we've got multiple
Speaker 1: companies in multiple different countries all working on it, will
Speaker 1: help everybody learn from each other and see what's working,
Speaker 1: what isn't working. And you have individuals like Bill Gates
Speaker 1: talking about building factories ahead of time for different candidate vaccines.
Speaker 1: All of that is going to probably make this the
Speaker 1: fastest time we get to a vaccine, and and certainly
Speaker 1: true that we've gotten to a vaccine candidate much faster
Speaker 1: than we have in the past putting things into get
Speaker 1: into phase one clinical trial. So I just don't want
Speaker 1: people to be over to get I don't want over
Speaker 1: promise or be overly optimistic, but everything is looking good.
Speaker 1: But I think we're going to have probably a period
Speaker 1: of eighteen months two years or so before the population
Speaker 1: is eacinated. We may get smaller batches before that for
Speaker 1: healthcare workers or high risk individuals. Interesting, so, when you
Speaker 1: think about sort of the other two pieces of the
Speaker 1: medical stool here, and we've all come to learn things
Speaker 1: that you know better than anybody else around. You know,
Speaker 1: we talked about vaccine, but also when it comes to therapeutics,
Speaker 1: and when it comes to the antibody test, where are
Speaker 1: we on those other two elements? Well? When so, the
Speaker 1: antibody testing is something that's been rolled out kind of
Speaker 1: in a staggered fashion, and you're starting to get more
Speaker 1: information that there are better kids out there. Some of
Speaker 1: the national lab chains like Question Lab Corps have developed
Speaker 1: prology tests that they're using as well. And the roach
Speaker 1: test is very good. There are some there that have
Speaker 1: a high rate of false positives meaning you don't really
Speaker 1: have you didn't really have the infection, but it's still
Speaker 1: reading positive that we have to be careful about making
Speaker 1: sure that people don't use those types of testament that
Speaker 1: they're using, the high validated, highly validated one when it
Speaker 1: comes to therapeutics, I do think we're in a better
Speaker 1: position than we were, just even if you months ago,
Speaker 1: there had been some positive views about ramdes Sevier, which
Speaker 1: is an experimental anti viral which received emergency use authorization
Speaker 1: from the FDA. This does seem to get people out
Speaker 1: of the hospital quicker. It is not a fantasia, it's
Speaker 1: not a knockout blow against the virus, but it is
Speaker 1: one tool that can help us preserve hospital capacity, and
Speaker 1: it does give you hope that we can make other
Speaker 1: anti virals than There are people trying to work on
Speaker 1: antibody based therapies, not just from recovered patients, but also
Speaker 1: synthetic antibody. So it is looking good, but we'll probably
Speaker 1: see those types of therapeutics much before we will see
Speaker 1: a vaccine. Dr Dolga, You know, here we are at
Speaker 1: this interesting junction, and Jason and I were planning for
Speaker 1: our weekend show. We talked a lot about this in
Speaker 1: relationship to Bloomberg Business week Magazine's cover story about reopening.
Speaker 1: There's so much discussion about it, you know, d Delay,
Speaker 1: do you go quicker? I mean, no matter what kind
Speaker 1: of reopening we do, there are they're going to be
Speaker 1: some individuals, right who will be at risk and some,
Speaker 1: unfortunately we will lose their their live. It's just the
Speaker 1: result of increased social interaction, right, It doesn't matter when
Speaker 1: we start. Is that fair to say? Exactly? That's exactly
Speaker 1: the truth. And I think many people don't appreciate that
Speaker 1: the virus didn't go anywhere. So someone says, I'm gonna
Speaker 1: wait till next week to get my hair cut. Um,
Speaker 1: there's nothing different going to be there because social distancing,
Speaker 1: the way that those stay at home orders were put
Speaker 1: in place was really and was really just to an
Speaker 1: eye in hospital capacity. It wasn't going to make things
Speaker 1: risk free. And nothing is going to be risk free
Speaker 1: in the air of the pandemic. And people are going
Speaker 1: to have to think about what's important to them, what
Speaker 1: their personal hierarchy of values are, what what they want,
Speaker 1: what's essential for them to do, what's not essential for
Speaker 1: them to do, and make these decisions on their own
Speaker 1: about what risk they're going to tolerate. Because it is
Speaker 1: true that the virus is here, and now this is
Speaker 1: something that we have to incorporate into our own risk calculation.
Speaker 1: Every time we step out the door, we're talking with
Speaker 1: Dr Amish Adalgia. He is infectious disease physician at the
Speaker 1: Johns Hopkins Center for Health Security, the Bloomberg School of
Speaker 1: Public Health, as you can tell by the name, the
Speaker 1: Bloomberg School Public Health supported by Mike Bloomberg, the owner
Speaker 1: of this RABI a station, founder of Bloomberg LP and
Speaker 1: Bloomberg Philanthropies. So, Dr Dolgha when it comes to reopening,
Speaker 1: one of the questions that we hear all the time,
Speaker 1: whether it's around our dinner tables or when we are
Speaker 1: talking to folks, is about schools, both elementary school, secondary schools,
Speaker 1: and higher ed. We're seeing colleges say they're going to
Speaker 1: bring students back onto campus. What's your read on the
Speaker 1: plans so far? Schools are something that's very controversial, and
Speaker 1: even the closure of them back in March was something
Speaker 1: that wasn't completely supported by everybody in my field. And
Speaker 1: we do know that school closures are something that have
Speaker 1: lots of negative consequences in terms of how do you
Speaker 1: how the students still learn? What about the students that
Speaker 1: rely on schools for meals? What about the students resocializing
Speaker 1: outside of school, especially as state at home orders are listed.
Speaker 1: All of that's really important, and what's the the impact
Speaker 1: the marginal value of closing schools, And there hasn't been
Speaker 1: a lot of data that shows that there are effective
Speaker 1: and really at stopping the spread of this. They don't
Speaker 1: magnify it doesn't magnify this disease the way they do influenza.
Speaker 1: We know they get infected, we know they have the
Speaker 1: virus in their nose, we know they have lots of contact,
Speaker 1: but we haven't seen data of children driving the epidemiology
Speaker 1: of that. So I do think that schools are going
Speaker 1: to probably be one of the first things that that reopen.
Speaker 1: It's going to be controversial, and right now we do
Speaker 1: have schools open, for example in Idaho and Montana, these
Speaker 1: private schools have opened, and I do think that that's
Speaker 1: going to be something that's done on the state by
Speaker 1: state level. But I do think it should be one
Speaker 1: of the first things that we start thinking about doing,
Speaker 1: because there are lots of negative consequences to it and
Speaker 1: not a lot of positive data that actually shows that
Speaker 1: it's beneficial. You know, you've been working in infectious diseases
Speaker 1: for a long time, and I do wonder you know
Speaker 1: what change is going forward in terms of how we
Speaker 1: approach it as a society. I think for such a
Speaker 1: long time, certainly the developed world was like, well, that's
Speaker 1: not something that happens to us. And I do think
Speaker 1: we are all changed dramatically because of this. I'm just curious,
Speaker 1: though you're much smarter than me on this, how do
Speaker 1: you see it? This pandemic has touched everybody. Often, infectious
Speaker 1: disease experts that that work on emerging infectious diseases and
Speaker 1: pan m A preparedness and biosecurity are often talking to
Speaker 1: themselves more than they're talking to the general public. But
Speaker 1: now we're seeing how impactful the pandemic can be and
Speaker 1: how important it is to think about pandemic preparedness beforehand,
Speaker 1: to make those investments ahead of time so that you
Speaker 1: don't end up in the situation that we're in now.
Speaker 1: And I do think that going forward, this is going
Speaker 1: to be something that people think about and and try
Speaker 1: to fortify, and hopefully this won't fall into that same
Speaker 1: cyclopanic and neglect that we've seen after anthrax or bird
Speaker 1: flu or H one N one or or Middle East
Speaker 1: respiratory syndrom, rozico or ebola, that these things come and
Speaker 1: go and they disappear from the headlines, and then policymakers
Speaker 1: forget about them even though they're still there. Hopefully this,
Speaker 1: this pandemic and its impact will change that line of thinking.
Speaker 1: And what have you learned through through all of this, Like,
Speaker 1: what's been the biggest surprise to you, dr Adlga? Knowing
Speaker 1: this so well and either in terms of the reaction
Speaker 1: in the public or the reaction even in your community,
Speaker 1: the biggest surprise to me is the fact that the
Speaker 1: United States was the most prepared nation against the pandemic,
Speaker 1: and we failed miserably at it, not because we didn't
Speaker 1: have the plans, not because we didn't know what to do, it,
Speaker 1: just because it was not executed properly. And there was
Speaker 1: a lot of politicization that occurred from the get go
Speaker 1: that really we still haven't recovered from. When you talk
Speaker 1: about what happened was testing and the testing protocols and
Speaker 1: viewing this mostly as a travel related infection that wasn't
Speaker 1: going to come here. All of that time that was
Speaker 1: wasted from January and February and part of March, where
Speaker 1: the focus was on the wrong actions and not the
Speaker 1: right actions, which would be increasing diagnostic testing capacity, fortifying
Speaker 1: our hospitals, public health communication to the general public about
Speaker 1: what was going to becoming, and getting our public health
Speaker 1: departments in line to be able to do contact tracing.
Speaker 1: That to me was surprising that this was all kind
Speaker 1: of textbook stuff that we've talked about for a long
Speaker 1: time and it just wasn't going didn't occur. Yeah. Well,
Speaker 1: I've got to say we've learned so much from you
Speaker 1: and the whole team at John's Hopkins. Uh, and let's
Speaker 1: hope we all learn a lot going forward. Dr amesh
Speaker 1: adalgia He's infectious disease physicians and at Johns Hopkins Center
Speaker 1: for Health Security at the Bloomberg School of Public Health,
Speaker 1: of course, supported by Michael R. Bloomberg, founder of Bloomberg
Speaker 1: LP and Bloomberg Philanthropies. This is Bloomberg Business Week with
Speaker 1: Carol Masser and Jason Kelly on Bloomberg Radio talk about tones.
Speaker 1: I feel like the cover story Jason Kelly kind of
Speaker 1: looks at some of that and the implications of what
Speaker 1: it might mean for US post COVID nineteen and the recovery. Absolutely,
Speaker 1: so let's get into it. If we can with the
Speaker 1: man who put it together and then the man who
Speaker 1: puts the whole magazine together every week. We're talking about
Speaker 1: the writer Peter Coy, economics editor for Bloomberg Business Week,
Speaker 1: joining us on the phone from New Jersey, and Joel Webber,
Speaker 1: he is, of course the editor of Bloomberg Business Week,
Speaker 1: joining us from Brooklyn. Alright, So Joel set the stage
Speaker 1: for us because I want to know the conversation you
Speaker 1: guys have, ye because leading into this, you know, and
Speaker 1: you're you're very kind in helping us sort of put
Speaker 1: together how we end up framing the cover story. You
Speaker 1: can listen to it every weekend. It's a great way
Speaker 1: to absorb it and to as a companion or instead
Speaker 1: of reading it. And when you sent us the notes,
Speaker 1: both Carol and I were like, WHOA, okay, kind of
Speaker 1: a little bit. That's that's a take. So te this
Speaker 1: up for us. So Peter and I have been sure
Speaker 1: of having ongoing conversations, um about obviously the biggest story
Speaker 1: in the world right now, which is not only the virus,
Speaker 1: which I think he's done an amazing job covering, but um,
Speaker 1: the economy, which is the other thing that he covers.
Speaker 1: Really well, and I basically sort of asked him to say, like, Okay,
Speaker 1: what's our what's our take, what's this gonna mean going forward?
Speaker 1: And and the you know, the the outlook, um is
Speaker 1: the thing that as business leaders, I think everyone's wrestling with,
Speaker 1: like what what's this thing gonna look like going forward?
Speaker 1: And so when we started talking about that, UM, I said, I,
Speaker 1: you know, I think one of the things that we
Speaker 1: have to bring in here is a conversation and about
Speaker 1: President Trump and and sort of this mismanagement of the
Speaker 1: virus from the outset and also now almost the mismanagement
Speaker 1: of perhaps reopening too soon and if if that goes
Speaker 1: um you know, uh not, well, that's going to have
Speaker 1: a serious impact on the economy. It's also a gamble
Speaker 1: for his re election campaign. And when I when we
Speaker 1: started talking about that, Peter goes, well, there's this thing
Speaker 1: called gambling on a resurrection you should know about. And
Speaker 1: I'll use that as a way to transition to Peter. Peter,
Speaker 1: what's gambling on a resurrection? Right? Term from game theory,
Speaker 1: So the idea would be if you're behind in a game,
Speaker 1: it could be any game. It could be uh football
Speaker 1: game or running for election or a laboratory experiment. Then you, uh,
Speaker 1: if you just play by conservative, normal rules, you'll probably lose,
Speaker 1: Whereas if you gamble, take a big chance, there's some
Speaker 1: chance that it will pay off and you'll be very happy.
Speaker 1: And if it doesn't pay off, well you're gonna lose anyway,
Speaker 1: So no big deal, um, And so a lot of
Speaker 1: you'll see that a lot of executives who are losing
Speaker 1: money and wanted trying to keep their jobs will gamble
Speaker 1: for resurrection, and up to the shareholders to discipline them
Speaker 1: and make sure they don't, you know, gamble too much
Speaker 1: in a way that ends up harming the company. So
Speaker 1: I said, well, we can carry that analysis over to
Speaker 1: the United States the federal government. Trump is taking a
Speaker 1: fairly big risk that this reopening will will work, that
Speaker 1: there will be relatively few extra deaths and the economy
Speaker 1: will rebound, and then he can win reelection. That's good
Speaker 1: for him. It's also good for the country if if
Speaker 1: it actually works out that way. But let me just
Speaker 1: finish on the downside quickly. The downside scenario is that
Speaker 1: he um loses, which she probably might have done anyway,
Speaker 1: but the country loses more than it would have under
Speaker 1: a conservative approach because they're more deaths in the economy,
Speaker 1: does not reopen quickly because you're getting resurgences and re
Speaker 1: shutdowns and people are afraid to stay at home. Exactly like,
Speaker 1: it gets to this whole idea, you know, by postponing,
Speaker 1: do you improve or reduce the impact by delaying the
Speaker 1: the open I feel like it's the big question that
Speaker 1: everybody is debating. The problem is, this isn't a game.
Speaker 1: This is you're dealing with people's lives and livelihoods. So
Speaker 1: I do wonder, you know, kind of how you see it,
Speaker 1: what's the alternative way of kind of approaching this versus
Speaker 1: maybe what we're getting from President Trump. Well, what we're
Speaker 1: hearing from a lot of epidemiologists is that you need
Speaker 1: to have um. You need to move gradually open the
Speaker 1: things that are most critical and where the risk of
Speaker 1: new outbreaks the smallest, and then keep shut the things
Speaker 1: that where they're the upside of reopening is relatively small
Speaker 1: and the risk is great. For example, we've heard Trump
Speaker 1: a lee think he can't wait to see you know, stadiums,
Speaker 1: sports stadiums filling up again, And I'm thinking, really, that's
Speaker 1: exactly the last thing you should want to open, just
Speaker 1: because there's so much exposure. Once one person asymptomatic person
Speaker 1: carrying the virus could expose dozens or hundreds of people
Speaker 1: in a single afternoon watching a football game or something,
Speaker 1: and so Joel, I mean that that's such an interesting
Speaker 1: point too, And as someone who looks across all of this,
Speaker 1: and also I think has has done a really tremendous
Speaker 1: job over the course of this administration sort of trying
Speaker 1: to understand not just economically, but from a business perspective
Speaker 1: and from a political perspective, the Trump presidency. I mean,
Speaker 1: I have to say this feels on brand to some extent.
Speaker 1: I mean, this is in some ways that a measure
Speaker 1: of this presidency. Well, that is certainly one of the
Speaker 1: ways that we wanted to touch on it um in
Speaker 1: this our coal and you know, to be clear, like
Speaker 1: we I really try not to put Trump on the
Speaker 1: cover episodes some extent, you know, in general, like this
Speaker 1: is I think only like maybe the third or fourth
Speaker 1: time I've done it in two and a half years
Speaker 1: as editor. And I also feel like it is the
Speaker 1: exact moment that we have to talk about this because
Speaker 1: it is a huge political gamble that he's also taking here,
Speaker 1: like and you know, if this goes well, to Peter's point,
Speaker 1: small chance that it does, but if this goes well,
Speaker 1: like he he might have the economy roaring by the time, um,
Speaker 1: you know the people are casting ballots, and that is
Speaker 1: obviously the thing that he's hoping for. And I think
Speaker 1: the realist part here is, as Peter did a really
Speaker 1: great job pointing out, is like it's it's probably not
Speaker 1: going to go well. It's probably gonna get worse if
Speaker 1: we reopen too soon. Everywhere we look around the world,
Speaker 1: the people who have gotten this thing under control, whether
Speaker 1: it's New Zealand, Iceland, um, South Korea to some extent,
Speaker 1: all of those places basically extinguished and eradicated any new
Speaker 1: cases before they reopened. We're not seeing those numbers in
Speaker 1: the US, especially outside of places that's coming down like
Speaker 1: New York. If anything, we're starting to see those numbers
Speaker 1: take up. And if that continues unabated, we could be
Speaker 1: in a world of hurt if we have to shut
Speaker 1: things down all over again. Well, and I just want
Speaker 1: to add on. You know, Jason and I had a
Speaker 1: conversation with Bill Haseltine, who created human genome sciences, and
Speaker 1: he said, you know, we'll have to remember that I
Speaker 1: took one person in China to create essentially where we
Speaker 1: are today, and so we need to think about I
Speaker 1: think there's something in your store. Peter. You say, to
Speaker 1: defeat the virus, we have to think like the virus
Speaker 1: um and I think that's really smart. Yeah, It's like
Speaker 1: we have a quote from a South Korean government minister
Speaker 1: who said that one infected person entering and previously unexposed population,
Speaker 1: it's like gropping a blob of ink and to a
Speaker 1: pool of clear water. It just where spreads everywhere really
Speaker 1: really quickly. And so, Peter, as you did this research,
Speaker 1: how our economists thinking about this? How are the experts
Speaker 1: that you're talking to thinking about this? I mean, are
Speaker 1: folks coming down on sort of in one camp or
Speaker 1: another in terms of what the right paces? And obviously
Speaker 1: this isn't a binary question, but I do wonder, because
Speaker 1: you do so much reading and reporting, I know, every day, like,
Speaker 1: what's the sentiment out there at this point? You know,
Speaker 1: some of the Bloomberg subscribers who responded to my email
Speaker 1: thought that, you know, we were being overly cautious. So
Speaker 1: that's one read on the situation, but I would say
Speaker 1: that most of the things I've been reading following uh
Speaker 1: there's there's mixed views, of course on this, but it's
Speaker 1: more like there's no single answer, like yes, reopen or no,
Speaker 1: won't reopen. It's it's, as I said, case by case
Speaker 1: and looking at costs and benefits in each particular situation,
Speaker 1: and also looking at local conditions. There are big differences
Speaker 1: between states that have the virus well in control and
Speaker 1: ones that don't, and they can't treat the same as.
Speaker 1: One of the points of Maiden Hear is that a
Speaker 1: shutdown of stay at home order is punishing but has
Speaker 1: a virtue of clarity, whereas the reopening that's happening at
Speaker 1: different paces in different ways all over the country, from
Speaker 1: county to county, state to state, is just going to
Speaker 1: be agonizing for everybody involved. Yeah. Absolutely, and I love
Speaker 1: to that you remind us to that. What's further complicating
Speaker 1: all of this is that you know, we are not
Speaker 1: all speaking with one voice, certainly not here in America,
Speaker 1: and that division is not a good thing because if
Speaker 1: one theme I feel like we have heard from everybody
Speaker 1: we've talked to medical community, even the corporate community is
Speaker 1: that we need to have coordination in order to really
Speaker 1: fight this. It's a must read. It's a fantastic cover story. Uh,
Speaker 1: and we highly recommend that you check that out as well.
Speaker 1: Us check out our podcast feed um for the cover story,
Speaker 1: it can be read to you. Economics editor Peter Coy,
Speaker 1: thank you so much, and of course our thanks always
Speaker 1: to Bloomberg Business Week editor Joel Webber joining us on
Speaker 1: the phone. But yeah, I mean, the thing about that story,
Speaker 1: I've just I've been thinking a lot about it, especially
Speaker 1: since we recorded the intro to that pod. You know,
Speaker 1: part of it is it will make you think like
Speaker 1: you may agree with it, you may disagree with it,
Speaker 1: And certainly there is to Peter's point, people are agreeing
Speaker 1: and or disagreeing a lot about this. But uh, it
Speaker 1: definitely it's a good thought starter and a good conversation
Speaker 1: starter with your family exactly. This is Bloomberg Business Week
Speaker 1: with Carol Masser and Jason Kelly on Bloomberg Radio. All right,
Speaker 1: we want to do a little bit of Business Week Economics,
Speaker 1: and we knew we had to talk about China and
Speaker 1: US tensions trade. It's such a part of our economy,
Speaker 1: our global economy, what impact it might have, and what
Speaker 1: to make of these tensions back with us? Is Andy around.
Speaker 1: He's Bloomberg New Economy editorial director. He's on the phone
Speaker 1: from New Hampshire, and you've seen the stories on the Bloomberg.
Speaker 1: You know, President Trump now pointing his finger at President
Speaker 1: G of China and basically saying he's responsible for quote,
Speaker 1: disinformation and propaganda attack on the US and Europe. I mean,
Speaker 1: what do we make of this back and forth and
Speaker 1: what seems to be increased tensions, particularly coming from President
Speaker 1: Trump at this moment. Is it just it's a campaign
Speaker 1: year and it's all about that, or how do you
Speaker 1: read it and how does President G take it? Well? Well, look,
Speaker 1: it's it's clearly escalatory rhetoric um from Donald Trump. I mean,
Speaker 1: it's very typical of his approach to take a line
Speaker 1: and then, um, when he gets resistance, double down on it.
Speaker 1: So last week he was saying that, you know, I
Speaker 1: don't want to speak to jimping anymore, um, And and
Speaker 1: that was quite a quite quite a shift, you know,
Speaker 1: because um, you know, the there's always been this figly
Speaker 1: because we were talking about last last week on on
Speaker 1: your show, where you know, whatever else has happened in
Speaker 1: the U. S. China relationship, she and she jimping and
Speaker 1: Donald Trump of a great relationship and they still get
Speaker 1: on the phone and then can still talk talk through
Speaker 1: problems and disputes and sort of it added a certain
Speaker 1: ballast to the relationship. And now he's saying now he's
Speaker 1: he's pointing it. Not explicitly today, I mean he didn't
Speaker 1: actually say she jimping, but it was pretty clear. Um,
Speaker 1: he said that this disinformation and propaganda comes right from
Speaker 1: the top. And of course the top in China is
Speaker 1: self explanatory. It has to be she jimping. But the
Speaker 1: thing is, isn't just rhetoric. I mean, so you've got
Speaker 1: this angry, personalized rhetoric now, and it's being backed up
Speaker 1: by a series of actions coming from the U. S. Administration. Um,
Speaker 1: you know, which is which is putting the which is
Speaker 1: you know, adding to real tension in the relationship. So
Speaker 1: you know that the latest was the Senate, um, you know,
Speaker 1: passing this bill which may well become law, which would
Speaker 1: result in Chinese companies being kicked off US stock exchanges.
Speaker 1: Companies like Ali Baba, huge companies, Bai Do, JD, Dot
Speaker 1: com you know, you've had the Commerce Department essentially um
Speaker 1: putting in place a global licensing regime that will essentially
Speaker 1: deny Huawei access to semiconductors or at least semi conductors
Speaker 1: that are manufactured with US software and hardware, which is
Speaker 1: pretty much all of the semi conductors in the world. UM.
Speaker 1: You know. So it's being backed this, this inflammatory rhetoric
Speaker 1: is being backed by by real action coming out of
Speaker 1: the U S side of Coase. This is on top
Speaker 1: of all the other things that we've seen, I mean,
Speaker 1: investment restrictions, technology restrictions, visa restrictions, and song well, and
Speaker 1: it's interesting to a headline just crossing US senators to
Speaker 1: offer a bill sanctioning China over Hong Kong. That's, according
Speaker 1: to dal Jones, a place you used to work actually,
Speaker 1: uh Andy Brown back before you came into you are
Speaker 1: lovely family and Empire. I mean, it's interesting to see
Speaker 1: the political might on this side of the equation, the
Speaker 1: US side, and meanwhile in China. And this is the
Speaker 1: story you know very well because you have tracked the
Speaker 1: career of President chi Jumping very closely. He appears to
Speaker 1: be by all accounts, kind of not wasting this crisis.
Speaker 1: In the immortal words of Rama Manuel, he's he's doubling
Speaker 1: down in his own way from a consolidation of power.
Speaker 1: He that's exactly right. And I think that's Jason, the
Speaker 1: point you made you know about about the you know
Speaker 1: the the so so you've you've you've got this this
Speaker 1: souring of the relationship. I mean, Henry Kisney was telling
Speaker 1: us last year that he thinks of the U s
Speaker 1: and China and the foothills of the Cold War, right,
Speaker 1: so now we're moving out of the foothills and we're
Speaker 1: moving into the uplands and went and into the mountains now.
Speaker 1: So so you have all of these tensions, then the
Speaker 1: question is what would be the flash point? Um And
Speaker 1: we've seen just in the last few days potential flash points.
Speaker 1: Taiwan is a real potential flash point. Now the Chinese
Speaker 1: are infuriated at at Pompeo's um you know, congratulatory messages
Speaker 1: to Taiwan President's haiing Wan on her inauguration. Now you
Speaker 1: have the Hong Kong story bubbling. So you know, you've
Speaker 1: got the meeting of China the National People's Congress, China's
Speaker 1: parliament today, which is likely. According to press report, South
Speaker 1: China wanting posts saying that, you know, delegates to the
Speaker 1: Chinese Parliament may well pass a national security law to
Speaker 1: be imposed on Hong Kong, which you know could very
Speaker 1: well lead to a resurgence or renewal of street protests, um,
Speaker 1: you know, a crackdown, and calls for for Hong Kong
Speaker 1: to lose its special trading status with the United States. So,
Speaker 1: you know, and and and again this is just this
Speaker 1: is just to flash when you got the South China Sea,
Speaker 1: you have the East China Sea. You have many other
Speaker 1: places where the US and China potentially could come into
Speaker 1: really serious conflict, right, multiple flashpoints. But to speak to
Speaker 1: Andie what Jason said, you know, President she you know, meantime,
Speaker 1: there's another story on the Bloomberg about how China's got
Speaker 1: a new one point four trillion dollar plan to overtake
Speaker 1: US and technology. Meanwhile, you know, they make these long
Speaker 1: term grand plans, you know, to move their economy into
Speaker 1: the future, and you know they're moving ahead. And I
Speaker 1: do wonder what we're missing, you know, as we focus
Speaker 1: on this spat once again coming out of the White House. Yeah,
Speaker 1: it looks kind exactly so you know, when what what
Speaker 1: what what What to the United States is decoupling to
Speaker 1: China is self reliance. Right, So the message they're taking
Speaker 1: away is we cannot trust the United States. We have
Speaker 1: to you know, we have to develop our own technology.
Speaker 1: So this is this is doubling this is this is China.
Speaker 1: This is she jimping, doubling down on technological self reliance, saying, look,
Speaker 1: you know, we're in a long term war. I mean,
Speaker 1: you know, they've they've accepted for a while now that
Speaker 1: this his confrontation and they're in a long term struggle
Speaker 1: UM with the with the United States. So one point
Speaker 1: four trillion dollars um. You know, they've been moving in
Speaker 1: this direction for quite some time. This COVID nineteam what
Speaker 1: we're seeing out of the White House accelerates those trends. Yeah,
Speaker 1: it's amazing. I mean, I go back to the conversation
Speaker 1: you and I had earlier this week, Andy about those threads,
Speaker 1: those two very very thin threads that are that have connected,
Speaker 1: And it feels like that personal relationship thread that you mentioned,
Speaker 1: he just the President of the United States. Seems to
Speaker 1: be Um has a pair of scissors right there. Uh,
Speaker 1: And and maybe he's already cut it. Maybe it uh,
Speaker 1: it can be saved, but it's it's an important point.
Speaker 1: But this conversation that Andy explains why there's some nervousness
Speaker 1: once again among investors and in the markets, because it's
Speaker 1: definitely playing out. I'm so glad we got some time
Speaker 1: with Andy. Andy Brown, editorial director at Bloomberg New Economy,
Speaker 1: joining us once again on the phone from New Hampshire. Andy,
Speaker 1: take care. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Jason Kelly on Bloomberg Radio. Well, it doesn't quite
Speaker 1: roll off the tongue like government sas does. But when
Speaker 1: you think about the firms here in twenty that have
Speaker 1: the tightest connections to Washington, maybe not so much in
Speaker 1: terms of personnel going back and forth, but in terms
Speaker 1: of the connection, the deep connections, the advice and the
Speaker 1: business that they are doing with the government, it feels
Speaker 1: like black Rock stands head and shoulders above. The world's
Speaker 1: largest asset manager is in the midst of this crisis,
Speaker 1: working with the Fed, advising the President. Is the CEO
Speaker 1: Larry Fink, advising us and keeping us honest about this.
Speaker 1: Is Annie massa investing reporter for Bloomberg. She follows black
Speaker 1: Rock incredibly closely, a frequent guest on this show, contributor
Speaker 1: to all of our platforms. So Annie, first of all,
Speaker 1: great to talk to you. It's been a while. I know, Hey,
Speaker 1: how's it going. We're doing okay, We're doing okay. It's
Speaker 1: nice to hear your voice. So what's happening with black
Speaker 1: Rock here? Because we have seen Larry think maneuver in
Speaker 1: some ways in a non nefarious way, but in a
Speaker 1: very effective way, at least not a nefarious that we
Speaker 1: know of. Uh, into the conversation here, what is black
Speaker 1: Rock up too? So black Rock has been coming up
Speaker 1: a lot in the past couple of months because the
Speaker 1: firm is taking a huge role in the Federal Reserve
Speaker 1: bailout of the corporate bond market and um, so what
Speaker 1: black Rock is doing is acting in a kind of
Speaker 1: expanded capacity. It had a role in the last crisis,
Speaker 1: and now in this one it's buying corporate debt on
Speaker 1: behalf of the shed and buying agency commercial mortgage backed
Speaker 1: securities on behalf of the shed. So really playing a
Speaker 1: central role in the said um, you know, hundreds of
Speaker 1: billions of dollars that is rest and I totally get
Speaker 1: why this is among our most read stories on the Bloomberg.
Speaker 1: It's been that way, um all day. So I'm just
Speaker 1: thinking for a casual listener, they're gonna be like, Okay,
Speaker 1: it sounds like black Rocks getting a great deal and
Speaker 1: they've got an you know, in with the government, So
Speaker 1: explain the relationship why it's necessary, Um, just just take
Speaker 1: us there. Sure. So if you think about the said,
Speaker 1: I mean the faids wheel houses obviously buying government debt,
Speaker 1: but when it comes to something like this, the unprecedented um,
Speaker 1: you know, rescue plan that they have the corporate bond market. Um,
Speaker 1: they're not necessarily uh carrying out those measures themselves, going
Speaker 1: out into the market and you know, valuing and buying
Speaker 1: uh corporate debt themselves. So that's why I need an
Speaker 1: asset manager to come in and do that on their behalf.
Speaker 1: So um, the said is black Rocks client in this case,
Speaker 1: and black Rock will perform that function for them. They'll
Speaker 1: buy newly issued bonds um from companies, they'll buy sting bonds,
Speaker 1: they'll buy some debt ets and that is um, you know,
Speaker 1: one big piece of this mandate that that black Ock
Speaker 1: has been handed over, and so they're turning to black
Speaker 1: Ock for their you know, expertise in in those markets
Speaker 1: and also for some of the risk technology UM that
Speaker 1: they have that can help in that process. So who
Speaker 1: ultimately owns it the FED? So yeah, so what's happening
Speaker 1: is black Rock is buying the debt on behalf of
Speaker 1: the FEDS is acting as the investment manager. And so
Speaker 1: Annie remind us to Larry Fink, very very important figure
Speaker 1: on Wall Street and I believe was rumored too maybe
Speaker 1: have been considered for a cabinet post had there been
Speaker 1: a Hillary Clinton presidency. He's been a pretty close advisor,
Speaker 1: frequent advisor to the current president. Right, yep, that's right.
Speaker 1: So you you kind of see UM black Rock having
Speaker 1: the ear of UM all kinds of administrations, both Democratic
Speaker 1: and Republican UM. But that's absolutely right that there was
Speaker 1: a lot of intrigue around whether Larry think would be
Speaker 1: considered as a potential trigury secretary and a potential Hillary
Speaker 1: Clinton administration. We've seen those kinds of UM rumors come
Speaker 1: back up now for a potential Joe Biden administration. So
Speaker 1: over the years, especially since the financial crisis, black Rocks
Speaker 1: gone from having a pretty limited presence in DC before
Speaker 1: that to um really a huge relations huge relationships down there, right,
Speaker 1: It's it's complicated, as they say. UM. What's interesting though,
Speaker 1: as you said, they're buying the debt on behalf of
Speaker 1: the FED. So they are the investment manager for the FED.
Speaker 1: I mean essentially they are an investment manager for Americans, right,
Speaker 1: I mean for the country to make sure they make
Speaker 1: smart investments because ultimately the FED will sell these investments
Speaker 1: back to the marketplace. That's exactly right. It's a really
Speaker 1: critical role in basically this uh this mission to prop
Speaker 1: up the corporate debt markets. And understandably it's brought a
Speaker 1: lot of um considerations over. Okay, how are they going
Speaker 1: to manage conflicts adventure to be because black Rock is
Speaker 1: a huge firm obviously, UM, you know, on other sides
Speaker 1: of the firm, they're participating in debt market so there's um,
Speaker 1: you know, knowledge of what the FET is doing could
Speaker 1: be useful. So what they say in their contract with
Speaker 1: the FED is listen, there are huge there are strict
Speaker 1: information barriers between what that side of the business, um,
Speaker 1: their financial markets advisory side of the business, which is
Speaker 1: the piece that's working for the FED. There's there's a
Speaker 1: wall ups basically between that and the rest of our firm.
Speaker 1: But that's then, you know, one of the questions that
Speaker 1: keeps coming up as people look at this steel, right,
Speaker 1: they wonder it's hard to call them an insider. Man. Yeah,
Speaker 1: come up, it's pretty amazing, all right, Well she's our insider.
Speaker 1: Any massa investing reporter Bor Bloomberg, Johnny Us on the
Speaker 1: phone from New York City. Great reporting, one of the
Speaker 1: most read stories on the Bloomberg. Not surprisingly black Rock.
Speaker 1: They got a big job, they got a lot of money,
Speaker 1: they got an influential ceo. I'm a journal now, but
Speaker 1: you let me drive. Oh no, no, no no, no's home, honey, please,
Speaker 1: I'll do the riding drivel. I want to drive, Just drive, baby,
Speaker 1: the questions trying. This is the drive to the Globe
Speaker 1: Community thing world Dry Russ Radio. It is time for
Speaker 1: the Drive to the close. Back with us is David Coudlaw.
Speaker 1: He's CEO and chief investment strategist at Mainstay Capital Management
Speaker 1: two point seven billion in assets under management. David back
Speaker 1: with us on the phone from Michigan. How are you
Speaker 1: tell me about Michigan? Man, I feel like the state
Speaker 1: just can't catch a break. It has been, uh an
Speaker 1: interesting time in Michigan. We've had certainly we've been one
Speaker 1: of the states that's that's been a hotspot for the
Speaker 1: COVID nineteen coronavirus, and certainly because of the auto industry,
Speaker 1: because of our overall economy here, it's been particularly hard
Speaker 1: on Michigan. When we see these unemployment numbers, jobless claims,
Speaker 1: we know that's coming right at the heart of of
Speaker 1: our industry and everyone here in Michigan. And then the floods,
Speaker 1: I'm sorry, the floods, yeah and oh and oh, yes
Speaker 1: and yeah in in uh Base City in mid Michigan,
Speaker 1: it's just been incredible, incredible with the damn that broke loose,
Speaker 1: and it's just been devastating, and so stepping over to
Speaker 1: the markets in the meantime, David, it's been quite a
Speaker 1: ride there, as we have experienced you across these ten
Speaker 1: or so weeks of sheltering in place here in New
Speaker 1: York City, you know, certainly seeing some literal highs and lows.
Speaker 1: What's your take at this moment, especially in a week
Speaker 1: where as Carol pointed out a little while ago, you know,
Speaker 1: the SMP is still in the green even with a
Speaker 1: little bit of an off trade today. Are we finding
Speaker 1: some stability or is this just kind of a moment
Speaker 1: where we're catching our breath. I think we are. You know,
Speaker 1: we've the way that we've played this is, you know,
Speaker 1: we've gone to the secular growth stories and and specifically
Speaker 1: that takes US two technology and e commerce and the
Speaker 1: cloud stocks and I t UH that held up really
Speaker 1: very well through the downturn and have done well even
Speaker 1: in the rebound. But now we are looking to the cyclicals.
Speaker 1: We've gone ahead and come back to the cyclicals, uh,
Speaker 1: leisure and entertainment. UH, come back to U E t
Speaker 1: s like I t B, the Ice shares, Dow Jones,
Speaker 1: U S home construction E t F. UH those E
Speaker 1: t F s that are already starting to rebound off
Speaker 1: these deep lows that they experienced all the way down
Speaker 1: to the low in the in the markets in general
Speaker 1: on March twenty three, and they've just really rallied off
Speaker 1: those lows already a lot and have that uh that rebound.
Speaker 1: We think more runway left in them now. It could
Speaker 1: be a bumpy ride, there could be if if we
Speaker 1: see um a second wave that some talk about or
Speaker 1: as we reopen the economy. Uh, that's a bumpier ride
Speaker 1: than we expect. But you know, so far, so good it.
Speaker 1: I think it's it's been not too early to come
Speaker 1: into those names because they've already had a real good
Speaker 1: rally off the bottom. Yeah, I'm just I gotta ask
Speaker 1: you that I T B, that I Shares Home Construction,
Speaker 1: et F. I mean it's up from that March low.
Speaker 1: You still think that there's opportunity there? Or do you
Speaker 1: think a lot of the enthusiasm about whatever bounce back
Speaker 1: we get is already priced in there? How could you
Speaker 1: not think it's not priced already priced in there? Well,
Speaker 1: because it it fell more than from from the level
Speaker 1: it was at down to March, so you know it is. Yes,
Speaker 1: it's come back seventy, but that's really about about two thirds,
Speaker 1: uh from the bottom. So we think we think it
Speaker 1: still has a little bit further. We still think it
Speaker 1: has a little bit further to go. And uh, we
Speaker 1: think that, you know, it still makes sense now we're
Speaker 1: starting to see uh, and I think have enough traction
Speaker 1: and even feel comfortable enough more recently coming into even
Speaker 1: UH names like you know, E T F, T, E J.
Speaker 1: The invest COO Dynamic Leisure and Entertainment ETF. We've been
Speaker 1: more concerned about, uh, you know, some of those sectors.
Speaker 1: But as planes start flying again, states start opening up.
Speaker 1: We talked about Michigan at the beginning to segment the
Speaker 1: northern part of the state is opening up. There are
Speaker 1: going to be uh more reopening in our We've had
Speaker 1: been on a very strict lockdown here in Michigan. But
Speaker 1: as as states start opening up, there's a lot of
Speaker 1: pent up demand and people that want to get out
Speaker 1: and about and and we'll see that reflected in these
Speaker 1: stock prices of the companies in these industries. What do
Speaker 1: you think of the automakers? And I think I thought
Speaker 1: it was last fall October you were short Tesla and
Speaker 1: I'm just curious, Um, you know how you see the
Speaker 1: automakers obviously an industry that has certainly been impacted by
Speaker 1: the lockdown. We caught up with the UH president CEO
Speaker 1: of Porsche Cars North America, Claud Zelmer, this week. UM
Speaker 1: about seventy or eight percent I think at their dealerships
Speaker 1: here in the US have have open, but they're learning
Speaker 1: to do a lot more things digitally. The other thing
Speaker 1: is they can't meet supply because the production lines have
Speaker 1: been shut down. So I'm just curious what are your
Speaker 1: takes on some of the auto names. David, Well, there's
Speaker 1: there there's going to be a significant gap. You know,
Speaker 1: a lot of the auto dealers are operating on appointment
Speaker 1: only to continue to deliver cars. But the plants haven't
Speaker 1: been building. You know, they're just starting to come back online.
Speaker 1: Production is start coming is just starting to come back
Speaker 1: online with all the producers. So there will be uh,
Speaker 1: some gaps in inventory. But again, you know, autos will
Speaker 1: be another area where uh we'll see that there's also
Speaker 1: pen up demand to meet that. So I think that uh,
Speaker 1: you know, when we look three or four months down
Speaker 1: the road, Uh, autos will be doing very well. Again,
Speaker 1: it's really just where they'll see some gaps in inventory here.
Speaker 1: As a production comes back online, the auto dealerships open
Speaker 1: back up, and that that pen up demand gets. Uh.
Speaker 1: It is sort of amazing to you speak of demand,
Speaker 1: and uh you do wonder sort of what the shopping
Speaker 1: and the and the retail online versus brick and mortar
Speaker 1: looks like on the other side of this. It's got
Speaker 1: to be a tough question to answer. Yeah, it is.
Speaker 1: You know, it was interesting coming into this. There's an
Speaker 1: e t F that that we've held before, clicks, it's
Speaker 1: appro shares, long online short stores. It was really just
Speaker 1: a slam dunk, you know, the with the government shutting
Speaker 1: down brick and mortar stores and really forcing or compelling
Speaker 1: those that weren't even comfortable shopping online, uh to do
Speaker 1: their shopping in that manner. And you know that et
Speaker 1: F has just been stellar, a stellar performer. Um, it's
Speaker 1: it's up some. It's down today because of those other
Speaker 1: names we're talking about. It's taking hit today, but still
Speaker 1: up over year today. You know, when the major indexes
Speaker 1: are still you know, in negative territory and didn't take
Speaker 1: that hit like you saw from so many other parts
Speaker 1: of our economy and so many different sectors. It really
Speaker 1: has just been a move up from you know, if
Speaker 1: I take a look in March. Yeah, it's been remarkable. Yeah. Interesting.
Speaker 1: All right, Well it's great to catch up with you.
Speaker 1: We really appreciate it as always. David Coula, CEO and
Speaker 1: chief investment strategist at main Stake Capital Management, looking after
Speaker 1: about two point seven billion dollars, Joinius on the phone
Speaker 1: from Michigan. Always good to get some perspective a from
Speaker 1: a different part of the country. Uh. And also some
Speaker 1: very specifics on the on the E T F side,
Speaker 1: which I feel like some so often we sort of
Speaker 1: talk about it in general, but those are some really
Speaker 1: specific names, especially that the long online short stores. I've
Speaker 1: never heard of that. That's a really interesting pix. Thanks
Speaker 1: so much for listening to Bloomberg Business Week. Download the
Speaker 1: podcast on iTunes, Southcloud, Bloomberg dot com, but wherever you
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